Tax Filing Relief Adds Time to Contribute to Benefit Plans

In Notice 2020-18, the Treasury Department and the IRS announced special federal income tax return filing and payment relief in response to the ongoing coronavirus (COVID-19) emergency.

In a Q&A, the IRS provides additional guidance regarding the relief, including about individual retirement accounts (IRAs) and workplace-based retirement plans, as well as health savings accounts (HSAs) and Archer medical savings accounts (MSAs). For example, the due date for filing federal income tax returns was extended to July 15, which means the deadline for making contributions to an IRA for 2019 is also extended to July 15.

Contributions may be made to an HSA or Archer MSA for a particular year at any time during the year or by the due date for filing a tax return for that year. Because the due date for filing federal income tax returns is now July 15, individuals may make contributions to their HSA or Archer MSA for 2019 at any time up to July 15. In addition, the due date for paying the 10% penalty on early withdrawals from IRA and retirement plans has been extended.

For a participant who contributed excess deferrals to his retirement plan in 2019, those excess deferrals and earnings on them must still be paid to the participant by April 15.

For employers with a federal income tax return due date of April 15, the relief not only extends the filing due date to July 15, but it also extends the grace period for the employer to make contributions to its workplace-based retirement plan that are treated as made on account of 2019 to July 15.